Up to 800 jobs at Arrival are at risk after the loss-making electric vehicle start-up pledged to cut costs by a third to prevent its cash reserves from drying up, making it the latest new carmaker to scale back staff.
The UK based company, which listed last year but has yet to begin production, blamed the “unique economic environment” as it unveiled a widespread restructuring of the business.
It suffered $10.4mn in net losses in the last quarter as it struggled with “supply chain issues, an ongoing pandemic, geopolitical tensions and rising inflation”.
It added that the problems “could potentially impact up to 30 per cent of employees globally”. The company has about 2,700 staff spread across the UK, US, Germany, Luxembourg and Georgia.
The restructuring will enable the group, which plans to make electric vans, buses and eventually cars, to make its $500mn of cash last until late 2023.
Several new carmakers, including Arrival, have been ramping up hiring as they prepare to begin producing vehicles. But tighter conditions, and rising prices for energy, staff and raw materials have forced them to slim headcounts.
Rival Rivian is this week expected to detail job cuts of about 5 per cent of its 14,000-strong workforce.
Even the well-established electric car pioneer Tesla, which is in the process of increasing production at several plants, was forced to cut 229 jobs after closing a Californian office.
Tesla previously warned of a 10 per cent cut to the salaried workforce, with boss Elon Musk warning employees he had a “super-bad feeling” about the economy, and telling a recent conference that a US recession was “more likely than not”.
Many new market entrants, including Arrival, floated shares through low-scrutiny reverse mergers with special purpose acquisition companies or Spacs, meaning adjustments are having to be made as public businesses.
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The problems across the sector have sent share prices tumbling. Arrival’s stock has plunged 80 per cent this year, while that of luxury EV group Lucid, which also listed through a Spac, has dropped by roughly half since the beginning of January.
Rivian, which went public through a traditional stock market offering, has suffered a share price fall of 70 per cent this year, previously warning it would produce half the vehicles expected in 2022 because of supply chain constraints.
Tesla has been hit, too. Its shares are down 40 per cent this year.
Arrival said its cuts would help the company begin production of its first vehicle, an electric van to be used by logistics group UPS, in the third quarter. It has a deal to sell 10,000 electric vans to UPS, which has invested in the business.
The company is also banking on smaller “microfactories” to lift profits as it produces vehicles in limited numbers and avoids the need for large investments in larger factories favoured by the rest of the industry.